Lord Harrison: rose to call attention to government assistance to small and medium-sized businesses; and to move for Papers.
	My Lords, the Government have been good for small businesses. Their crowning achievement has been to run a sound economy, with low inflation and stable interest rates resulting in 54 quarters of GDP growth in the United Kingdom. Small firms are doing well, with 1,500 start-ups every working day. The business survival rate is also up by 2 per cent since 1967. The launch of the small business service, the strengthening of Business Link, the reduction of corporation tax and the creation of a single tax department are just some of the flanking initiatives that have reinforced that macro-economic stability. Each initiative has contributed to building into small businesses a growing confidence in the confidence to grow.
	But we cannot be complacent. The January CBI small and medium-sized enterprises trends survey saw a fall in the volume of new orders, so today's debate is timely in advance of the Budget and the forthcoming discussion of SME policy by the EU heads of state at the spring Council. Given that there is now a firm and welcome political consensus in this country that small firms are vital to Britain, and that a stable economy is central to their health, I welcome a debate on how we enhance the micro-economic climate to strengthen small firms—a debate, perhaps, that avoids the sterile ideological debates of the past, which saw the major parties too often forget, forgo or forswear the small-business sector.
	I shall talk first about the Budget and then about the European Union. I hope that my noble friend has read the two excellent pre-Budget submissions to the Chancellor by the Forum of Private Business and the Federation of Small Businesses, each of which brims with ideas worthy of serious consideration. I shall pick out but a handful. Will my noble friend clarify whether national insurance is a hypothecated levy or a general tax? Whatever it is, it is clearly regressive and a burden on payroll administration, and hence a disincentive to recruitment. Does my noble friend agree? As a Labour Peer, I celebrate the success of the national minimum wage and its carefully phased introduction.
	But the time is drawing near for us to find an equitable rate for the minimum wage, which can then be up-rated annually in line with inflation. This would give to small firms the certainty to plan and expand.
	Similarly for business rates, which should be brought into line with the lower levels of business rates enjoyed on continental Europe. Does my noble friend harbour, like me, the particular anxiety that this can sometimes be an unfair tax, representing a disincentive to firms which need space as part of their core activity? The emphasis, of course, is on space and not on profits.
	I have two suggestions in respect of VAT. First, could my noble friend commend to the Chancellor a zero-rated VAT trading scheme whereby VAT is charged only at the final stage of consumption where all the previous traders in the supply chain are themselves VAT registered? This would cut out a spool or two of unwanted red tape. Secondly—an idea already being piloted in the European Union—I suggest the application of a reduced rate of VAT on labour intensive jobs. This will help the so-called "Lifetime" small firms, a sector often overlooked by policy makers. Let us be bold and introduce a phased approach to VAT registration. A series of gently rising hurdles is better than the "Fosbury flop" of precipitate VAT registration, which currently leaves too many small firms for the high jump.
	While I am on the subject of jumping through hoops, perhaps I may turn to the SME's ability to comply with legislation. Some commentators favour a system of exempting the smallest firms from some health and safety legislation, but I flinch at the thought of small firms being outside of the net of good law on health and safety at the workplace. A more fruitful approach is the phasing-in of commencement dates for compliance, giving small firms additional time to prepare for and finance compliance with new legislation. There is the additional advantage that small firms can then learn from the experience of larger firms, which may well be in their supply chain and already have gone down that path.
	Such phasing-in of the law is precedented by the excellent late pay legislation brought in by the Government. Can the Minister give an update on this legislation and tackle the continuing problem that many small firms face of having the fear of upsetting their relationship with the bigger firms they supply when requesting interest on late payment? This is a right that is not always being observed. Indeed, according to the research carried out by Leeds University Business School and the Federation of Small Businesses, some 2,200 publicly-quoted leading firms in the United Kingdom are still flouting the reporting regulations which require them to publish the actual number of days that they take to pay on their invoices. Furthermore, does my noble friend recognise that payment periods have still not significantly shortened, as had been hoped? And yet there are larger firms, such as the fashion chain Next, which literally do just that—pay bills the very next day—and remain successful firms. Is it not time that their welcome practice became fashionable? What more can HMG do to strengthen the late payment legislation?
	That brings me on to another theme, which has been pressed upon me by, amongst others, the City of London's Mr Bruce Hunt and the FSB. Not all Acts of Parliament are excellent pieces of legislation. It is a hazard of our job that we, as legislators, like to legislate—it provides our raison d'être—so perhaps I may suggest to my noble friend how we might enshrine into law the Better Regulation Task Force's alternatives to regulation check lists. Requiring the Secretary of State to sign an affidavit on the face of the Bill that all alternatives to legislation had been studied and rejected as inadequate for the job in hand would have the salutary effect of making us pause and thoroughly explore the alternatives—including, on occasion, doing nothing.
	It was welcome news last week to learn that the OFT was reviewing the practices of supermarkets and whether their all-powerful position in the market place compromises fair competition and penalises small businesses—especially the corner shop, some 20,000 of which, since 1997, have indeed shut up shop. Will my noble friend look, in particular, at a situation which vexes smaller traders—that is, the off-shore VAT loophole whereby some supermarkets are channelling through the Channel Island of Jersey low-value consignments, such as cheap CDs and DVDs, thereby exploiting EU exemptions on charging VAT on goods in the €10 to €22 range? The Treasury is thought to be losing some £80 million a year from a loophole exploited by companies such as Tesco, ASDA and Amazon. What can be done?
	I know that it is not in his brief, but will my noble friend reflect on last night's passing of the Second Reading of the Education Bill, which will, of course, mean that more businesses will have a stronger interest in our schools? If that is the case, what more can be done to introduce, as it were, small firms on to the school curriculum and thereby encourage our young people to think that small business might represent a good idea for a career?
	Returning to his DTI responsibilities, perhaps I may raise with my noble friend the implementation of the waste electrical and electronic equipment directive, which has been dogged by yet another announcement last December of a fourth delay in its implementation. What is happening? This has spread confusion and uncertainty among small friends. Will my noble friend ensure that the small chemical firms are not snowed under by red tape in applying the otherwise very important reach directive?
	Perhaps I may now turn to the advice given to small businesses and Business Link. I hope my noble friend will take time to study the Cambridge Centre for Business Research's recent survey which suggests that Business Link has successfully established itself in the business community but perhaps should focus less on so-called hard targets, such as growth and profit, and more on soft help—such as brokerage—and putting firms in touch with each other which can literally forge business links. I also would endorse my noble friend's consideration of the CBR's view that devolving Business Link to the RDAs may not be wise.
	I turn now to the issue of women and small businesses. Statistics show that women are more successful than men in sustaining a small business once the hurdle of starting up has been surmounted, but few of them go on to grow into bigger businesses out of the small acorns that they plant. These glass doors to entry and the glass ceilings to progress are still representative of a debilitating prejudice against women's businesses. But things are on the move. I attended the All-Party Parliamentary Small Business Group meeting with the EOC to discuss the Work and Families Bill. I think that the Government are taking positive measures there to ensure that we cut the number of the estimated 30,000 women who at present lose their jobs because of pregnancy and restore to them the ability to contribute to small businesses.
	Turning to the EU, does my noble friend acknowledge that the single European market is itself in danger of going into reverse because of the rise of narrow nationalism on continental Europe? The services directive, for instance, is serviceable, but hardly the best that we could have done. In the light of the tide of nationalism, I encourage Her Majesty's Government to renew and redouble their efforts to press on with the Lisbon agenda. I am alarmed, however, by the Government's hesitation, in the face of some virulent, home-bred anti-EU prejudice, to roll out the Euro Info Centres network, whose prime task is to cut to the quick the advice given to small businesses about EU initiatives appropriate to their needs. Can my noble friend report on what is happening to these important Euro information centres?
	Before I leave the subject of the EU, I pay tribute to other British initiatives, promoting small firms in the EU, including the Small Business Bureau and the British Chambers of Commerce link up with Microsoft to focus on the small business environment and raise awareness of e-security. I welcome the ACCA's focus on such issues as access to finance and to publicising Eurobarometer's statistic that half of all owner-managers still find difficulty in accessing loans from high street banks—an old sore. The Minister should also come down like a tonne of bricks on our EU partners who, according to the Commission's European single market scoreboard, are still falling woefully short of applying legislation that has been agreed at Brussels. If we are not serious about completing the single market, why should small firms compete in it?
	Finally, I celebrate the creation of the Genesis Initiative, begun by my noble friend Lord Randall. It brings together small firms and their national federations within the EU to ensure that Europe is indeed open to small businesses.
	I deviate here just to make mention of the Legislative and Regulatory Reform Bill. This has a very worthy purpose in trying to cut down on the amount of old legislation, which needs to be weeded out. We need to slash and burn the red tape that impedes our small businesses, but not on the pyre of parliamentary scrutiny.
	In that spirit, I hope that we can engage in a useful debate on small businesses and improve that micro-climate in which they can thrive and prosper. I beg to move for Papers.